Web of lies, Ponzi scheme in $3.5 million real estate scam

A Lake Forest woman pleaded guilty for her part in a Ponzi scheme real estate investment web of lies that bilked nearly $3.5 million from Southern California investors, authorities said.

“Investors were led to believe that they would receive substantial interest payments and that their money would be secured by collateral through the filing of deeds of trust on properties,” said Thom Mrozek, public affairs officer of the U.S. Attorney’s Office

Over the course of several years leading up to the collapse of TEGG, the company was not acquiring new properties and had a negative cash flow.

Investor money was not used to acquire new properties, nor was it secured by collateral, and many victims did not receive interest payments, a prosecutor said, and money that was paid to some victims as purported interest or a return on their investment came from investments made by other victims.

Angel Bronsgeest, 55, pleaded guilty Monday to one count of wire fraud before U.S. District Judge Cormac J. Carney.

In court, Bronsgeest admitted participating in a scheme in which victims were offered investments in a company known as The Equity Growth Group, also known as TEGG, according to U.S. Attorney Eileen M. Decker.

As part of the solicitations, Bronsgeest admitted that she made false promises to investors, such as falsely advising that TEGG controlled hundreds of properties that generated rental income and that TEGG would continue its growth by acquiring new properties, Decker said.

“This investment scheme was built on lies that began with false promises made during seminars to potential investors,” Decker said.

“The falsehoods supported a Ponzi scheme that took money from unsuspecting victims for years and caused millions of dollars in losses. Investors must be wary of investment schemes that promise high rewards and no risk.”

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Bronsgeest is scheduled to be sentenced by Carney on Dec. 4. The charge of wire fraud carries a statutory maximum penalty of 20 years in federal prison.

“Defendant Bronsgeest knowingly took money from investors while knowing her offer was fraudulent,” said Deirdre Fike, the assistant director in charge of the FBI’s Los Angeles field office.

“Bronsgeest participated in this scheme in which her co-defendant, Shawn Watkins, used and overstated his brief history as a reserve deputy with law enforcement in order to gain the trust of investors, an exaggeration which ultimately got the attention of law enforcement officials and led to his undoing.”

Watkins was arraigned on Sept. 1, 2016, after surrendering to FBI agents in Orange County.

Watkins was charged with nine counts of mail fraud, wire fraud and money laundering in an indictment that alleges he masterminded the scheme that defrauded at least 50 victims, according to Decker.

Watkins is scheduled to go to trial on Aug. 1 before Carney and if convicted of the nine charges in the indictment, he would face a statutory maximum penalty of 180 years in federal prison.

Watkins allegedly presented himself as an expert in real estate investment and attempted to gain trust by telling investors that he previously had worked in law enforcement.

—City News Service

Web of lies, Ponzi scheme in $3.5 million real estate scam was last modified: January 25th, 2017 by Debbie L. Sklar